CHAIR AND MEMBERS CORPORATE SERVICES COMMITTEE MEETING ON DECEMBER 13, 2016

Transcription

1 TO: CHAIR AND MEMBERS CORPORATE SERVICES COMMITTEE MEETING ON DECEMBER 13, 2016 FROM: MARTIN HAYWARD MANAGING DIRECTOR, CORPORATE SERVICES AND CITY TREASURER, CHIEF FINANCIAL OFFICER SUBJECT: REQUEST FOR WRITE-OFF OF PROVINCIAL OFFENCES ACT (POA) ACCOUNTS RECEIVABLE RECOMMENDATION That, on the recommendation of the Managing Director, Corporate Services and City Treasurer, Chief Financial Officer, the following actions be taken: a.) b.) Civic Administration BE AUTHORIZED to write-off the outstanding Provincial Offences Act (POA) Accounts Receivable, attached as Appendix B, in accordance with the Ministry of the Attorney General (MAG) Write-Off Directive and Council Policy 8(5) being the Accounts Receivable and Collections Policy; and, That the Mayor BE DIRECTED to submit a letter to the Association of Municipalities of Ontario (AMO) outlining the City s perspectives on POA collections and a recommendation for AMO to advocate for province-wide solutions, which could include a study of licence plate reissuance to examine expanded recovery tools for outstanding POA fines, amongst other topics (e.g. licence plate condition). PREVIOUS REPORTS PERTINENT TO THIS MATTER Request for Write-Off of Accounts Receivable (December 15, 2015 meeting of Corporate Services Committee) Ministry of Attorney General Provincial Offences Act, R.S.O 1990, C.P. 33 Modernization Consultation Online Administrative Monetary Penalties (April 21, 2015 meeting of Corporate Services Committee) Request for Write-Off of Accounts Receivable (December 16, 2014 meeting of Corporate Services Committee) Request for Write-Off of Provincial Offences Act (POA) Accounts Receivable (November 26, 2012 meeting of Finance and Administration Services Committee) Provincial Offences Act (POA) Collections Ministry of Attorney General (MAG) Write-Off Directive (November 26, 2008 meeting of Board of Control) 20Agendas%202008/ %20Agenda/Item%206.pdf

2 BACKGROUND On March 26, 2001, the Province of Ontario transferred the responsibility for the administration and prosecution of provincial offences in London-Middlesex to the City of London. This transfer was part of the Province's strategy to realign provincial and municipal roles in the delivery of public services. As a result, the City was required to establish its own administration and prosecution office and courtrooms to deal with charges laid under the Provincial Offences Act. What are provincial offences? Source: This transfer allowed the City to retain the fine revenue associated with Part I and Part III of the charges and old Part II (parking pre1994) charges. Part I, II and III are defined below: Part I charges are minor offences commonly referred to as tickets and typically carry a maximum penalty of $1,000. Part II charges are exclusively parking tickets (pre-1994 collected by POA and post-1994 are part of the City s Parking division). Part III charges are serious offences that require a court appearance and may result in jail time in addition to substantial fines. A ticket charge is comprised of: Fine as legislated by the courts and various Acts Victim Fine Surcharge (VFS) o a component of the fine but not retained by the City o imposed on every non-parking fine and deposited by the provincial government into a special fund to help victims of crime o the amount of the VFS is usually $20 of the imposed fine but fines over $1,000 carry a surcharge of 25% Cost additional charge laid if not paid within the required time limit Fee additional enforcement fee laid if not paid within the required time limit If the ticket remains outstanding, additional costs may be added, such as: Collection agency costs costs of recovery if collected by the City s third party collection agencies Other collection costs certificate of default fee, writ fee, etc.

3 To further understand the composition of a ticket, the following numerical example has been included: Example of a fine composition: Fine Victim Fine Surcharge (VFS) B 13.33% Total Fine Fail to Respond (FTR) docket cost 5.00 Total Cost 5.00 Enforcement fee Total Fees Total fine per MAG file % Add Collection Agency Costs (CAC) 14.90% A Total amount collected by Collection agency Less Collection agency Commission paid 14.90% (22.35) A Net amount collected from Collection agency Less Victim Fine Surcharge (VFS) (20.00) B Gross Revenue to City Less County Share 16.56% (21.53) C City Share of Gross Revenue % A - user fee by-law allows Collection Agency Costs (CAC) to be added to the fine and included in the amount assigned to collection agencies - results in net effect of nil cost to City for cost of collection agencies B - Victim Fine Surcharge is not shown as revenue - collected and shown as liability on balance sheet - remitted to MAG each quarter C - The County Share is calculated based on the annual weighted average assessment. The calculation is part of the Intermunicipal Service Agreement between the County, the City and all of the neighbouring municipalities within the County of Middlesex. Collections As part of the transfer of responsibility for the operation of Provincial Offences Courts in 2001, the Province also downloaded responsibility for the collection of a delinquent cases portfolio containing over 74,000 cases, having a total value of approximately $17 million. The devolvement of defaulted POA fines from the Province immediately required Ontario Municipalities to establish effective methods for the management of court administration, support functions, collection and civil enforcement activities. The opportunity to attempt the collection of this substantial receivable portfolio required proper tools and adequate staffing resources. As the receivable balance continued to grow after devolvement, it became evident that the City would have to develop and implement a collection strategy.

4 Internal collection processes A series of processes and a number of tools were implemented in order to effect the most expeditious collection of default fines. New tools and processes are continually being developed to increase collection efforts of the service area. These processes include: Data received from MAG each month is scrubbed to correct addresses, add postal codes and telephone numbers Automated telephone campaign is performed within 15 days of receipt of the newly defaulted fines A series of collection letters have been developed and are sent out based on the default status of the POA fines. If mail is returned undeliverable, various skip-tracing tools are utilized to research updated addresses and telephone numbers and the appropriate collection notice is generated. Various enforcement activities are undertaken by the POA staff, which may include: o driver's licence suspension, o licence plate denial, o credit bureau reporting o the filing of Certificates of Default o further civil enforcement action. There is no relief or reprieve from a fine as the court determines the fine, not the municipality. Once a fine has been imposed by the court, options for defendants include: applying for an extension of time-to-pay (determined by the court) and appealing a sentence to a judge. Approx. $1.2 million is currently on hold from collection activity as a result of these options. Collections and administration staff do not have statutory authority to reduce fines due to hardship. Collection staff may consider payment plan arrangements on a case by case basis but there must be evidence of a good faith intention to pay based on these arrangements. Payment plans are documented in the collection system and flags indicate when payments have been missed. Missed payments would result in resuming of the collection process listed above. External collection processes As a part of its strategy to collect Provincial Offences Act fines in default, the City also contracts with four professional collection agencies that are selected through an RFP process. If the POA collection staff are unsuccessful in collection activities through in-house activities, they then assign the receivables to the collection agencies. The collection agencies are monitored on a regular basis and will be given a portion of the receivables based on their prior months recoveries. It is only after the POA collection team have applied their best efforts to the collection of the debt through the various means listed above that they would recommend that a fine be deemed uncollectible and recommend to Council that collection activities cease. It is currently POA collection s strategy to concentrate collection efforts on fines that are less than 2 years old and assign older debt to the collection agencies, after exhausting in-house collection methods. The MAG directive and guideline (Appendix A ) provides municipalities with the written authority to establish write-off criteria for those aged delinquent cases deemed uncollectible and staff have developed the required operating procedures to comply with the MAG directive. The recommendations contained in this report will allow POA collection staff to fully concentrate their efforts on the most recent delinquent cases and will assist in maximizing the effectiveness of the POA collection process. The removal of cases deemed uncollectible will reduce the size and value of the delinquent fines portfolio to a more meaningful level and assist in forecasting future potential revenue based on a more accurate database.

5 Alternative collection tools In addition to collection options discussed above, alternative tools have been sought to support the recovery of POA fines. The focus has generally been at the provincial level to expand the collection avenues for outstanding amounts. In 2010, amendments to the Municipal Act, 2001 permitted municipalities to add outstanding POA fines to tax rolls as tax arrears. This approach would require the payment of fines owed, with the ability of the municipality to force a tax sale in the extreme. The tax rolls tool, however, is limited in its use as joint ownership of a property excludes the municipality from adding a single individual s outstanding POA fines to the tax rolls. Staff anticipate we would have minor success with the use of this tool, given the joint ownership limitation. Last year, the Legislative Assembly passed Bill 31, the Making Ontario s Roads Safer Act. In addition to a number of new traffic-related requirements, Bill 31 expanded licence plate tag denial to drivers that have outstanding POA fines for speeding, improper lane changes, illegal turns, driving without insurance and careless driving. Like the current requirements to pay outstanding fines associated with parking tickets, red light cameras and Highway 407 tolls, the province will collect the broader scope of POA fines with licence plate tag renewal and remit fine amounts to municipalities. It is anticipated that the licence plate tag recovery tool will be in place in the spring of 2017, following upgrades to the MAG computer system. Although the changes to Bill 31 may provide some additional recovery of POA fines, there has been an increasing conversation within the province in recent years to examine additional tools for the administration of justice. The discussion has centred on the examination of full licence plate reissuance as a more comprehensive means to recover outstanding POA fines. Licence plate reissuance has been implemented in the majority of states in the United States of America, with unique plates created for each reissuance period. It has been suggested that this approach is superior to licence plate tag stickers as the visual distinctions between plates enhance enforcement. Additionally, licence plate reissuance can improve the administration of justice as it would be much more challenging to drive with expired plates. The reissuance of plates could increase the payment of POA fines, especially if the scope of eligible recovery was expanded from the relatively limited number of POA offences at present. Civic Administration is recommending that the provincial government be requested to undertake a study of licence plate reissuance to examine additional recovery options for POA fines, in addition to other issues. In recent years, the Ontario Association of Chiefs of Police and several other organizations have advocated for the province to introduce a licence plate replacement process due to concerns about the large number of damaged licence plates presently in circulation. The examination of POA fine recovery could be part of a study to address these concerns. It is anticipated that the study would involve extensive stakeholder engagement to confirm the scope of the review. It is recognized that this issue affects municipalities across the province. To that end, Civic Administration is further recommending that this issue be brought forward to the Association of Municipalities of Ontario (AMO). As the leading voice of Ontario s municipalities to the Province, AMO is best positioned to advocate for a province-wide solution. Although licence plate reissuance may provide additional means of recovering outstanding POA fines, it should not be viewed as a panacea to eliminating the City s POA balance. Many individuals with POA fines do not own vehicles or have limited capacity to pay. However, licence plate reissuance could be an additional tool to support the administration of justice for those that have managed to evade other collections and enforcement efforts to date. Financial Impact For accounting purposes, revenue should be recognized when the critical event occurs. Due to legislative procedures and numerous factors that could affect the timing and ultimate payment of a fine, it was determined that the appropriate time to recognize the revenue is when the fine is paid. As a result, this revenue is recorded on a cash basis. The 2017 tabled budget includes budgeted revenue for Courts Administration of $5.8 million. Approximately 40 50% of this revenue will come from defaulted fines pursued by the collection team in Financial Services. The remaining portion comes from offenders that pay their ticket on time, as required.

6 Outstanding POA Accounts Receivable balance The current POA accounts receivable total outstanding balance is just over $41.5 million. To understand the volume and aging of the portfolio, staff have provided a snapshot of the current outstanding fines, broken down by year of enforcement: Enf Year Total Cases Total Outstanding % Aggregate % # $ % 0.00% , % 0.02% % 0.02% % 0.02% , % 0.10% , % 0.11% , % 0.12% , % 0.13% , % 0.14% , % 0.16% , % 0.17% , % 0.21% , % 0.27% , % 0.46% , % 0.55% , % 1.13% , % 2.37% ,385, % 5.70% ,261 2,208, % 11.01% ,270 2,418, % 16.83% ,862 2,108, % 21.90% ,623 2,843, % 28.74% ,912 3,125, % 36.26% ,976 3,072, % 43.65% ,156 3,401, % 51.83% ,142 3,739, % 60.83% ,211 4,022, % 70.50% ,603 3,432, % 78.76% ,442 2,937, % 85.82% ,938 2,512, % 91.87% ,307 2,365, % 97.56% ,536 1,015, % % 91,685 $41,571, %

7 Write-offs Staff are seeking approval to write-off a total of 565 cases with a total value of $4,019,338 as set out in the Council Policy 8(5) being the Accounts Receivable and Collection Policy. In addition to these recommended write-offs, there have been administrative write-offs under this policy of 30,636 cases with a total value of $5,191,994. It should be noted that cases are written off for accounting purposes only. Such write-offs do not absolve a convicted offender from the requirement to pay a case, as debts to the Crown are owed in perpetuity and are never forgiven. In writing off the above referenced cases the electronic record will be removed, however all original source documents must be retained by the court office in accordance with the MAG directive and a separate data base containing these written-off cases will be maintained. Summary This report recommends that the delinquent cases, as set out in Appendix B, be approved for write-off and removed from the electronic POA system, as they meet the MAG s approved criteria for write-off. Civic Administration also recommends that the Association of Municipalities of Ontario advocate for increased tools (e.g., licence plate reissuance) as a means of increasing the recovery of outstanding POA fines. This report was prepared with the assistance of Shannon Manders and Paul Yeoman of Financial Services and Adam Thompson of Government and External Relations. SUBMITTED BY: CONCURRED BY: SHARON SWANCE MANAGER, ACCOUNTING FINANCIAL SERVICES MICHAEL SCHULTHESS MANAGER, PROVINCIAL OFFENCES COURTS ADMINISTRATION CONCURRED BY: ANNA LISA BARBON DIRECTOR, FINANCIAL SERVICES RECOMMENDED BY: MARTIN HAYWARD MANAGING DIRECTOR, CORPORATE SERVICES & CITY TREASURER, CHIEF FINANCIAL OFFICER c: P. Yeoman, Manager, Business Process Planning A. Thompson, Manager III, Government and External Relations Attach.

8 Appendix "A" Provincial Offences Act Write-Off Directive and Operating Guideline Provincial Offences Act Unit POA and Strategic Planning Branch Court Services Division Ministry of the Attorney General February 25, 2008

9 Appendix "A" PROVINCIAL OFFENCES ACT WRITE-OFF DIRECTIVE AND OPERATING GUIDELINE PURPOSE: 1. To ensure that Municipal Partners administering the Provincial Offences Act (POA) courts can demonstrate that they have exercised due diligence with respect to the write-off of POA accounts receivable and made all reasonable efforts to minimize the value of POA accounts receivable recommended for write-off. 2. To provide guidance with respect to best practices regarding the write-off of POA accounts receivable that have been deemed uncollectible. SCOPE AND APPLICATION: 1. This Directive and Operating Guideline applies to all Municipal Partners that are subject to a POA Transfer Agreement and the related Memorandum of Understanding (MOU) with the Attorney General. 2. This document has been developed to provide Municipal Partners with guidance as to the minimum requirements they are expected to meet in order to write-off POA accounts receivable. While the decision to write-off POA accounts receivable that have been deemed uncollectible is a local decision to be made by a Municipal Partner once all reasonable efforts to collect unpaid, defaulted fines have been exhausted, a Municipal Partner must follow the directives contained herein in order to ensure that the Province of Ontario, its Ministries and Agencies will not attempt to collect any portion of the written off funds from the Municipal Partner, including funds related to dedicated fines, fees or surcharges, subject to clause 4 below. 3. The Recommended Best Practices contained in this document have been developed to provide Municipal Partners with guidance with respect to best practices regarding the write-off of POA accounts receivable that have been deemed uncollectible. 4. Where a Municipal Partner has written off POA accounts receivable and any portion of those accounts receivable are subsequently paid, the requirements of the POA Transfer Agreements and the Provincial Offences Act, including requirements with respect to the remittance of certain funds to the Province of Ontario upon collection, continue to apply.

10 PRINCIPLES: Appendix "A" 1. All reasonable effort to collect fines imposed under the POA must be made before any consideration for write-off is made. For purposes of this policy, write-off means the cessation of active collection. 2. In accordance with the requirements of the MOU, an equal effort to collect unpaid fines, regardless as to whether they are retained by the municipality or paid to a third party, must be demonstrated. 3. POA accounts receivable may be written off for accounting purposes only and do not absolve a convicted offender from the requirement to pay a fine, as debts to the Crown are owed in perpetuity and are never forgiven. 4. Collection activities of written-off accounts can be resumed when conditions change, as fines imposed by POA Courts are debts owed to the Crown and therefore are not subject to the Limitations Act. 5. Municipalities must retain adequate records after an account is written-off in order to support the possible future reinstatement of collection efforts. MANDATORY REQUIREMENTS: General 1. Each Municipal Partner shall create a formal Write-off Policy establishing protocols and thresholds under which POA accounts receivable shall be deemed to be uncollectible and therefore eligible for write-off. 2. Equal treatment and effort regarding the collection of all POA fines must be applied, without regard to whether the resulting revenue will be retained by the Municipal Partner or remitted to another third party. 3. With the exception of minor underpayments (i.e., less than $25 outstanding), POA accounts receivable marked for write-off must have been in default for a minimum of 2 years. 4. Action to collect accounts receivable outstanding less than 2 years from individuals for whom a death certificate has been received may be undertaken should the Municipal Partner s Collections Policy and Protocol specifically require recoveries from Estates. 5. Where a Municipal Partner decides to write-off POA accounts receivable, the reasons for the write-off must be transparent and justifiable and must not place the administration of justice into disrepute.

11 Appendix "A" 6. Each Municipal Partner must have exhausted all reasonable and appropriate measures and efforts to collect unpaid, defaulted fines prior to the consideration of recommending a write-off. 7. The documentation in support of a Write-off recommendation must, at a minimum, include the following: Copy of original Certificate of Offence or Part III information; Record of additional costs and fees included in the outstanding amount; Documentation as to all collection activities undertaken; and Reason the write-off is recommended Ongoing Administration 1. Where a Municipal Partner has written off POA accounts receivable and any portion of those accounts receivable are subsequently paid, the Municipal Partner must remit to Ontario, in a timely manner, all monies received in respect of fines, surcharges and fees that are payable to Ontario pursuant to subsection 165(5) of the Provincial Offences Act. 2. Where a Municipal Partner has written off POA accounts receivable and the related case(s) have been purged from ICON and any portion of those accounts receivable are subsequently paid, the case(s) related to the payment received must be re-entered into ICON (see related ICON instructions in Appendix A) and the payment must be recorded as revenue, with supporting documents, and distributed in accordance with the MOU. 3. Where, under the terms of the POA Transfer Agreement, a Municipal Partner proposes the contracting out of any services related to the performance of its obligations under the POA Transfer Agreement, the Municipal Partner must ensure that the contract provides that the person or organization performing the contract will meet the mandatory requirements and have due regard for the recommended best practices contained within this directive and operating guideline. 4. On an annual basis, each Municipal Partner must provide the POA Unit of the Ministry of the Attorney General with information regarding the total value of all fines deemed uncollectible and written-off during the previous municipal fiscal year (i.e., January 1 st to December 31 st ) as part of the Annual Performance & Progress Report to be submitted no later than June 30 th of each year.

12 RECOMMENDED BEST PRACTICES: Appendix "A" 1. The Municipal Partner should have its written policy and protocol for the collection of unpaid, defaulted POA fines and criteria for write-off of uncollectible amounts approved by Council or by the Council committee responsible for the administration of the POA courts via a municipal By-Law. 2. Examples of reasonable and appropriate measures and efforts to collect unpaid fines prior to the consideration of recommending a write-off include the following collection activities, applied progressively. While the actual measures and efforts to be employed by a Municipal Partner should be documented in its Write-off Policy, the following steps provide guidance as to what is reasonable and appropriate: Timely creation and distribution of all notices and communications; Progressively severe delinquency notices, including letters via registered mail; Consideration of extended payment plan; Application of available administrative sanctions; Specialized collection assistance; and Civil fine enforcement mechanisms. 3. Accounts receivable should be reviewed semi-annually to identify potential write-offs and annually to identify accounts deemed uncollectible and to be recommended for write-off. RESPONSIBILITIES: Municipal Partners: Setting thresholds and formalization of own write-off policy based on the principals and requirements of this document; Specifying the format and reporting detail for write-offs recommendation submissions; and Final approval to cease active collection and write-off a fine. Court Managers: Coding and processing in ICON;

13 Appendix "A" Document collection efforts made prior to the recommendation of a writeoff; and Monitor outstanding accounts receivable on a semi-annual basis for potential write-offs. Ministry of the Attorney General: Provision of continued access to ICON or its successor; Timely and regular scheduling of ICON purges; and Assistance to municipalities in dealing with other Provincial Ministries ADDITIONAL INFORMATION: If you have any questions or require further information regarding this document, please contact Pam Elliott, Provincial Offences Act Unit, at (416) or Pamela.Elliott@ontario.ca.

14 Appendix "A" Appendix A Process for Re-Entering Cases into ICON 1. Access the IACVH (conversion) screen with the case number. 2. The IIOFE (entry) screen will appear, allowing for entry of the case information. Please note that ICON will only allow dates prior to December 31, 1994 to be entered into the court date field. It is suggested that, in order to identify these cases, all cases being re-entered after write-off and subsequent payment should be keyed with a common court date (e.g., ). Once you hit the enter key, the ISCDS (update) screen will automatically appear. 3. Update the case information on the ISCDS (update) screen with the disposition information, including entering the same date in the conviction date field as was entered in the court date field on the previous IIOFE (entry) screen (e.g., as noted above). Update the fine and cost information and hit the enter key. The case has now been re-entered into ICON and payment can be processed through the IFCR (cash) screen. The payment information related to the case should appear on the daily RICO reports. Please note that access to the IACVH (conversion) screen is limited to Court Manager s.

15 Appendix "B" Summary of Write-Offs